Archive for April 7th, 2008

Mishkin on inflation targeting and central bank communication

April 7, 2008

Fed Governor Mishkin has given 2 good speeches.

First, on the importance of having point inflation targeting (say 2%) vis a vis range inflation targeting (say 1%-3%). And second one on the central bank communications.

Both are nice revisions of the central ideas in monetary policy.

How do you push reforms in a developing country?

April 7, 2008

We get to read a lot of papers on what kind of reforms should a government initiate. And these papers are across specialisations- employment generation, inflation management , capital account convertibility, financial sector etc.

However, there is still a dearth of literature on how do you get these reforms done? Most reforms involves the government and this is where most of the problems are faced. The technical ideas are well-known (there is hardly any innovation there really) but are left to politicians to implement them. And when unsuccessful the blame is put on latter.

It is fine to criticise but ensuring that development programs are implemented are as important as the main idea. And development economists should also work on understanding how development ideas are/can be implemented.

Here is a paper by Matthew Andrews (of Harvard) provides some ideas on how to implement the ideas. The abstract:

Most members of the development community, and especially those in multilateral and bilateral organizations, agree that politicians are centrally important to development. Fewer agree, however, on how to ensure effective political engagement in development programs and reforms. It is questionable whether many practitioners or theoreticians even have clear ideas about what effective political engagement looks like. Terms like political will and political commitment lack clarity and operational import; it is unclear what they are and even more unclear how to foster them. This chapter attempts to shed light on why such a key issue is poorly understood and to suggest ideas for thinking about it.

Nice paper. Though it could have been much better if the author had given more case studies to show what worked where. One would have to read other papers by the author as well.

Assorted Links

April 7, 2008

1. Ajay Shah on algorithmic trading. He also points to the release of much expected Raghuram Rajan chaired report on financial sector reforms in India.

2. WSJ Blog points Central Banks stick with USD

3. Krugman points that 2008 is an year of potato.

4. Mankiw on carry trade

5. Rodrik has a fantastic thought on rising food prices. He says the much discussed suggestion to curb rising food prices is trade liberalisation in agriculture.  But that would actually raise food prices.

6. IMF’s Blog will have lots of discussion in days to come on the world economy.

7. EPSA Blog points to a silver lining in this year’s budget


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